You are here: Home/Blog/ Corporate Governance Crucial for Small Firms: MoS

Corporate Governance Crucial for Small Firms: MoS

December 9, 2013

Improving their corporate governance could see small firms enjoying better business opportunities and credibility.

According to a Straits Times article titled “Small firms ‘should introduce corporate governance practices”, Minister of State for Trade and Industry Teo Ser Luck said corporate governance would help steer smaller firms in the right direction, especially if they are considering raising capital through an initial public offering.

This is because corporate governance minimises risks to the enterprise, and lays the foundation for its sustainable growth, he explained.

WHAT IS CORPORATE GOVERNANCE?

Corporate governance refers to a system of principles and processes governing a firm so that it fulfills goals and objectives in a way which adds value to the firm.

The presence of a structured governance system is a huge plus for a firm, as it is something which investors look out for when deciding on which firm to invest in.”

A firm with good corporate governance conducts business with fairness and transparency, by disclosing what’s necessary, such as transactions and profits, while complying with regulations and being accountable to its stakeholders.

Rikvin acknowledges that clearer guidelines and standards would benefit a firm substantially. Although corporate governance would typically be clearer and more structured in listed companies, smaller firms should take it upon themselves to establish the same.

Mr Satish Bakhda, Chief Operations Officer, Rikvin, said a firm with a reputation for good corporate governance would attract more investors.

“The presence of a structured governance system is a huge plus for a firm, as it is something which investors look out for when deciding on which firm to invest in. It usually has a positive influence on the share prices of a firm, making it easier for firms to raise capital,” he said.